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THE NEUTRAL LINE 

A PLEA FOR SCIENTIFIC 
REGULATION OF THE TARIFF 



ADDRESS TO THE NATIONAL TARIFF 
COMMISSION CONVENTION 
AT INDIANAPOLIS 
FEBRUARY 16, 17 AND 18, 190 9 



NEW EDITION— WITH INTRODUCTION 

REPRINTED JANUARY, 1911 
BY THE 

NATIONAL TARIFF COMMISSION ASSOCIATION 



BY 

HENRY R. TOWNE 

President Merchants' Association of New York 
Treasurer National Tariff Commission Association 

JANUARY, IQU 



THE NEUTRAL LINE 

A PLEA FOR SCIENTIFIC 
REGULATION OF THE TARIFF 



ADDRESS TO THE NATIONAL TARIFF 
COMMISSION CONVENTION 
AT INDIANAPOLIS 
FEBRUARY 16, 17 AND 18, 1909 



NEW EDITION— WITH INTRODUCTION 

REPRINTED JANUARY, 1911 
BY THE 

NATIONAL TARIFF COMMISSION ASSOCIATION 



BY 
HENRY R. TOWNE 

President Merchants' Association of New York 
Treasurer National Tariff Commission Association 

JANUARY, igil 



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INTRODUCTION TO NEW EDITION 

DECEMBER, 1910. 

W7HILE the argument offered in the following paper is believed 
to be as inherently sound to-day as ever, the situation to 
which it relates has changed greatly since it was presented at the 
Indianapolis Convention of February, 1909. 

Then, the proposition that a permanent, non-partisan Tariff 
Commission should be made a part of the regular machinery of 
the Federal Government was new to most, and startling to many, 
of our citizens ; to-day it is understood by nearly all of them, and 
is favored by a decisive majority of those who understand it. 
Then it was opposed or ignored by politicians, and by most mem- 
bers of both Houses of Congress; to-day it is perhaps the most 
actively discussed measure of pending legislation before the coun- 
try. Then it was merely a theory, which its advocates sought to 
transform into a reality; to-day it is a reality, partially complete, 
in the form of the existing "Tariff Board" created by President 
Taft, under the authority given to him by a clause in the Payne- 
Aldrich Tariff Bill of August, 1909. For the progress thus 
made, and for the enlightenment of the public understanding 
which produced it, credit must be given in large part to the Na- 
tional Tariff Commission Association, which was brought into 
existence by the Indianapolis Convention. It is hoped that the 
work so begun and so carried on may be brought to a successful 
conclusion during the present session of Congress, and there is 
much encouragement for believing that this hope may be realized. 

STATE PLATFORMS. 

No better evidence can be adduced in support of these state- 
ments than the following analysis of the "platforms" of the two 
great political parties, adopted in their State Conventions during 
the recent electoral campaign, in regard to the inclusion of a 
"plank" relating to the creation of a permanent Tariff Commis- 
sion, and to the cognate question of tariff revision hereafter one 
schedule at a time. These "planks," analyzed to determine their 



bearing upon the following two questions, show the following 
results, viz. : 

A. As to a permanent, independent, expert Tariff Commis- 
sion or Board. 

B. As to action on the tariff by Congress, in the future, — 
one schedule at a time. 

ANALYSIS OF STATE PLATFORMS 



State 


Republican Convention Democratic Convention 


Alabama 


no mention 


no mention 


Arizona 


no mention 


no mention 


Arkansas 


strongly favorable 
as to "A" 


no mention 


California 


strongly favorable 
as to "A" 


favorable as to "A" 


Colorado 


strongly favorable 
as to "A" and "B" 


no mention 


Connecticut 


strongly favorable 
as to "A" and "B" 


no mention 


Delaware 


favorable as to "A" 


no mention 


Florida 


no convention 


no convention 


Georgia 


no convention 


no mention 


Idaho 


no mention 


no mention 


Illinois 


strongly favorable 
as to "A" and "B" 


no mention 


Indiana 


strongly favorable 
as to "A" and "B" 


no mention 


Iowa 


strongly favorable 
as to "A" and "B" 


no mention 


Kansas 


strongly favorable 
as to "A" and "B" 


no mention 


Kentucky 


no mention 


no convention 


Louisiana 


no platform 


no platform 


Maine 


no mention 


no mention 


Maryland 


strongly favorable 
as to "A" and "B" 


no mention 


Massachusetts 


strongly favorable 
as to "A" and "B" 


no mention 



State 


Republican Convention Democratic Convention 


Michigan 


strongly favorable 
as to "A" and "B" 


no 


mention 


Minnesota 


strongly favorable 


denounced as 




as to "A" and "B" 


subterfuge 


Mississippi 


no platform 


no 


platform 


Missouri 


strongly favorable 
as to "A" and "B" 


no 


mention 


Montana 


strongly favorable 
as to "A" 


no 


mention 


Nebraska 


strongly favorable 
as to "A" 


no 


mention 


Nevada 


favorable "A" 


no 


mention 


New Hampshire 


strongly favorable 
as to "A" and "B" 


no 


mention 


New Jersey- 


strongly favorable 
as to "A" 


no 


mention 


New Mexico 


no platform 


no 


platform 


New York 


favorable as to 
"A" and "B" 


no 


mention 


No. Carolina 


favorable as to "A" 


no 


mention 


North Dakota 


favorable as to "A" 


no 


mention 


Ohio 


favorable as to "A" 


no 


mention 


Oklahoma 


no mention 


no 


mention 


Oregon 


no mention 


no 


mention 


Pennsylvania 


no mention 


no 


mention 


Rhode Island 


favorable as to "A" 


no 


mention 


So. Carolina 


no convention 


no 


mention 


South Dakota 


strongly favorable 


denounced as 




as to "A" and "B" 


subterfuge 


Tennessee 


no mention 


no 


mention 


Texas 


no mention 


no 


mention 


Utah 


no mention 


favorable as to "A" 


Vermont 


favorable as to "A" 


no 


mention 


Virginia 


no platform 


no 


platform 


Washington 


favorable as to "A" 


no 


mention 


West Virginia 


no convention 


no 


convention 


Wisconsin 


favorable as to 


denounced as 




"A" and "B" 


subterfuge 


Wyoming 


no mention 
3 


no 


mention 





RECAPITULATION. 


REPUBLICAN 


28 


States 


endorsed the Tariff Commission 
principle. 




15 


a 


endorsed revision by schedule. 




12 


a 


no mention. 




8 


tt 


no convention. 




1 " 
36 States 


no report. 


DEMOCRATIC 


no mention. 



2 (California and Utah) endorsed the 

Tariff Commission principle. 

3 (Minnesota, S. Dakota and Wiscon- 

sin) denounced as subterfuge. 
7 " no convention. 
2 " no report. 

NUMBER OF REPUBLICAN MEMBERS of the present 
House of Representatives from States which endorsed the Tariff 
Commission Principle in their State Platforms. 

California 8 

Connecticut 4 

Delaware 1 

Illinois 19 

Indiana 2 

Iowa 10 

Kansas 8 

Maine 4 

Maryland 3 

Massachusetts 11 

Michigan 12 

Minnesota 8 

Missouri 6 

Montana 1 

Nebraska 3 

New Hampshire 2 

New Jersey 7 

New York 26 

North Carolina 1 

4 



North Dakota 1 

Ohio 13 

Rhode Island 2 

South Dakota 2 

Vermont 2 

Washington 3 

Wisconsin 10 



Total 169 



POSITION of the Republican members of the present United 
States Senate on the Tariff Commission question as indicated by 
their State Platforms. 

46 committed by their State platforms. 
16 no mention or no platform. 



62 Total (Republicans). 

Reviewing these figures, the President of the National Tariff 
Commission Association, Mr. John Candler Cobb, of Boston, 
comments as follows: 

SUMMARY. 

"It may be fairly deduced from this exhibit that the Republi- 
can party has accepted the Tariff Commission principle and has 
recorded itself so strongly in favor of legislation developing the 
present Tariff Board into a permanent independent Tariff Com- 
mission that action at the coming short session of Congress may 
be reasonably expected and should be earnestly urged. It is 
interesting to note that of 219 Republican members of the present 
House of Representatives, 169 are from States which have de- 
clared in their platforms in favor of the Tariff Commission prin- 
ciple, and of 62 Republican members of the Senate, 46 are from 
States that have so declared. 

The position of the Democratic party is clearly shown to be 
not in opposition to the principle of a Tariff Commission, as in 
a very large majority of State platforms no stand was taken, only 
five Democratic platforms having any mention, two being favor- 
able and three attacking not so much the principle of a Tariff 
Commission as the method of treatment of the question by the 
Republican party as being a subterfuge. The position of the 
Democratic party throughout the country is apparently much the 



same as that taken by many leading Democrats to our Committee 
in Washington last Spring, that they believed in the principle of 
a Tariff Commission but did not have faith that the Republican 
party would wisely and consistently carry it out. Our own mem- 
bership, made up as it is of Republicans and Democrats in all 
parts of the country, would seem to indicate that partisanship has 
no place in the discussion of the question. 

An analysis of the Republican Platforms geographically is 
interesting as showing that every State in the Middle West de- 
clared favorably, all but two of the Eastern States and most of 
the Western States, while much apathy was shown on the question 
in the Southern States. And most significant of all is the fact 
that one of the most heated and closely contested campaigns we 
have had for many years, in which the general Tariff question 
has been a dominant issue, has been fought this Fall without de- 
veloping in either party or in any section of the country an attack 
upon the principle of a permanent, independent Tariff Com- 
mission." 

As indicative of the character and intent of some of the 
'planks" above referred to, the following may be quoted : 

TARIFF PLANK IN THE PLATFORM 
ADOPTED BY THE REPUBLICAN CON- 
VENTION OF MASSACHUSETTS, 1910. 

"We recommend the establishment of the Tariff Board. We 
approve of the construction which President Taft has placed upon 
its powers and duties. We believe, however, that there should be 
further legislation to define clearly the powers and duties of such 
board and make it a permanent, independent, expert Tariff Commis- 
sion, the function of which shall be to discover and report to 
Congress from time to time such facts and statistics as will enable 
Congress to amend the tariff law intelligently and scientifically 
according to the principle of protection. 

We believe that such changes should be made in the rules of 
the House of Representatives and of the Senate of the United 
States as may be necessary to make practicable the amendment of 
the tariff, one schedule at a time. 

We believe that permanency in our tariff law is of great im- 
portance to our business interests and to the workingmen who de- 
pend upon such interests for steady employment. No tariff rate 
should be changed until the necessity for such change is demon- 
strated. When, however, the Commission reports facts which 
show the tariff to be wrong in any particular, we believe that Con- 
gress should, after a proper hearing, amend the tariff in that 
particular." 



CONVENTION. 

The task which remains is to complete the work so well begun 
by obtaining legislation by this Congress, during its present short 
and final term, which will ensure the creation and permanency 
of a Tariff Commission, with all the authority and facilities 
needed to ensure its usefulness and competency for the end in 
view. For that purpose a Convention of the National Tariff 
Commission Association, to be held in the city of Washington, 
January 11-12, 1911, will constitute a most effective agency, by 
furnishing a rostrum for the elucidation of the subject, and for 
the expression of public sentiment concerning it. The Conven- 
tion is to be opened by an address by Professor Henry C. Emery, 
chairman of the present Tariff Board, and at the banquet to be 
given the following evening the delegates will be addressed by 
President Taft, whose recent Message to Congress contains the 
following passage: 

"The Tariff Board thus appointed and authorized has been 
diligent in preparing itself for the necessary investigations. The 
hope of those who have advocated the use of this Board for tariff 
purposes is that the question of the rate of a duty imposed shall 
become more of a business question and less of a political ques- 
tion, to be ascertained by experts of long training and accurate 
knowledge. The halt in business and the shock to business, due 
to the announcement that a new tariff bill is to be prepared and 
put in operation, will be avoided by treating the schedules one 
by one as occasion shall arise for a change in the rates of each, 
and only after a report upon the schedule by the Tariff Board 
competent to make such report." 

The National Tariff Commission Association embraces up- 
wards of one hundred affiliated organizations, such as Chambers 
of Commerce, Boards of Trade, and Merchants' and Manufac- 
turers' Associations, in almost every one of the several States, 
whose aggregate memberships represent, directly and indirectly, 
more than 100,000 corporations, firms and individuals, engaged 
in every branch of commerce and industry, and of all political 
parties. The movement is thus National in the broadest sense, 
non-partisan, non-sectional, and popular. A most significant fact 
is that it is, and long has been, endorsed and actively promoted 
by the National Association of Manufacturers, the leading, 

7 



strongest and most representative industrial organization in the 
country, whose membership of 3,000 embraces most of the 
important corporations and firms in every field of organized 
industry. It is also favored by the National Grange, the leading 
organization of the agricultural interests, which adopted a resolu- 
tion at its National Convention, held November 26, 1910, urging 
the creation of a "non-partisan tariff commission/' 

FUNCTIONS OF THE COMMISSION. 

In conclusion a word may be added as to the functions of the 
proposed Tariff Commission. In the first place these do not, as 
has sometimes been supposed, involve any encroachment upon 
the prerogatives of Congress. The latter is vested, under the 
Constitution, with sole power to make laws and to control the 
financial policy of the Nation, and that power cannot and should 
not be delegated. The functions actually proposed for the Tariff 
Commission are to study facts, at home and abroad, relating to 
tariff problems, to employ for this purpose a staff of trained tech- 
nical experts, versed in all forms of applied science and industry, 
together with the necessary statisticians, clerks and other assist- 
ants, to embody their findings of facts in reports to Congress, for 
its use in framing tariff legislation, and to the President, for his 
use in the execution of the tariff laws, and also to assist the 
latter, with information and advice, as to the application of the 
tariff laws in the negotiation and operation of commercial treaties 
with foreign nations. These functions, as thus indicated, have 
aptly been likened to those of a commissioner appointed by a 
Court to make a finding of the facts in a case at law, on which 
state of facts, so ascertained and reported, the Court (Congress) 
bases its decision and decree. 

The need of such a tribunal for the ascertainment of techni- 
cal, industrial and statistical facts relating to the vast and intri- 
cate problems which the tariff involves, is now recognized by all 
who are not wilfully blind. The primitive and superficial method 
which has prevailed heretofore has been outgrown and should be 
discarded. It is unsuited and inadequate for effecting the adjust- 
ment of the tariff to the infinitely complex conditions of our 
infinitely varied national industries, the crudities and inconsis- 
tencies of its results are notorious, it is generally believed to have 

8 



fostered log-rolling methods and injustice, and it is hopelessly out 
of gear with the great development of the applied sciences on 
which all of our vast and varied industries are largely based, and 
which they must increasingly avail of in their further progress. 
The remedy is obvious and simple, there is a unanimity of judg- 
ment as to its form, and it has unequivocally been approved by 
the people in the recent elections. To the demand thus implied, 
the people's representatives in the National Legislature should 
respond now, by enacting, during the present session of Congress, 
the simple legislation which is needed. 

THE PRESENT TARIFF BOARD. 
As the final and most convincing argument may be cited the 
work already accomplished by the existing Tariff Board, created 
by President Taft under the authority given him by the Payne- 
Aldrich Tariff Bill. Although compelled to devote the first five 
months of its existence to investigations called for by the Presi- 
dent to assist him in the application of the maximum and mini- 
mum provisions of the tariff, the Tariff Board, in the short 
period which has since elapsed, already has made a substantial 
beginning in its permanent work, has demonstrated conclusively 
the practicability of attaining the results desired and hoped for 
from a permanent Tariff Commission, and has convinced all un- 
prejudiced investigators of its methods and accomplishments thus 
far that the work which has so splendidly been begun, and which 
already gives such full assurance of ultimately solving one of the 
greatest and most difficult problems of the National Government, 
should now be placed on a basis which will assure beyond question 
its permanence, continuity and logical development to the fullest 
usefulness. 



THE NEUTRAL LINE 

A PLEA FOR SCIENTIFIC REGULATION OF THE TARIFF 

By Henry R. Town£, President of the Merchants' Association of N. Y. 

February, 1909. 



DEFINITIONS 

* 

(From the Century Dictionary.) 



Tax; a disagreeable or burdensome duty or charge; an enforced proportional 
contribution. 

Duty; a tax or impost. 

Tariff; a list of goods with the duties to be paid on them. 

Protection; a system of developing the industries of a country by means of 
imposts on products imported into that country. 

Subsidy; an aid in money. 

Technical; those things which pertain to the practical part of an art or science. 

Scientific; concerned with the acquisition of accurate and systematic knowledge 
of principles by observation and deduction. 

Neutral; in the condition of one who refrains from taking sides in a contest. 



THE ARGUMENT. 

"T 1 HIS paper is intended to set forth an argument, and the 
salient facts on which it is based, in favor of a permanent 
technical official organization, as a necessary instrumentality for 
a continuing adjustment of the tariff, by methods which will 
assure equal consideration to all interests, those of the producer, 
the distributor, and the consumer; in other words, a means 
whereby Congress shall be aided in finding the "Neutral Line" 

11 



which will imply a maximum of advantages with a minimum of 
disadvantages to all interests concerned. The argument will be 
confined to this single issue, and will include no discussion of the 
opposing theories of protection and free trade, either of which, 
in practical application, would be benefited by the existence and 
work of the proposed new organization. 



THE TARIFF. 

'T 1 AXES are either direct or indirect. A tariff is an indirect 
tax. Its primary purpose is revenue ; it may include the sec- 
ondary purpose of protection. A tariff rate intended to prevent 
importation ceases to be a tax and becomes a subsidy. 

In considering any "proposed tax, these questions should be 
considered : 

1 : On whom will it fall ? 

2 : What revenue will it yield ? 

3: Whom, if any, will it benefit? 

If reliable data are available, and if the tax is for revenue only, 
these questions may perhaps be easily answered; but if it is wholly 
or partly for protection, to foster and benefit certain classes of 
citizens at the possible or intended expense of other classes, the 
problem becomes vastly complex, and its just solution requires 
information of many kinds, both industrial and commercial, con- 
cerning both domestic and foreign conditions, and a judicial 
atmosphere free from bias, selfish influence, or corruption. In 
both cases the effort should be to find that "Neutral Line" be- 
tween opposing considerations which will ensure the maximum 
benefits and the minimum evils, the greatest justice and the least 
injustice, to all interests. The first endeavor should be to ascer- 
tain and consider the classes which must pay the tax ; not those 
which it will benefit. Throughout should be kept in mind the 
fact that three great interests are involved, viz., the govern- 
ment, which must have revenue ; the people, for whom the govern- 
ment exists, and who must pay the taxes which support it ; and the 
beneficiaries (if any) of the tax, whose interests are opposed to 
those of the other two, even though the public welfare may be 
promoted by encouraging the industry which they represent. The 

12 



end to be sought is the "Neutral Line" which implies equal justice 
to each interest involved. 

It is the settled policy; of the United States to obtain a large 
part of its income from duties on imports, and in doing this to 
foster and promote domestic industries. Of its total revenue of 
about $670,000,000, approximately one-half is derived from cus- 
toms. Does not that function of the government which controls 
the collection and determines the incidence of this great tax upon 
the various classes of people and their diverse industries, justify 
and demand the creation of an adequate method for adjusting its 
vast number of details so that the tax shall be distributed fairly 
among those by whom it is to be paid, and shall yield the best 
results to the government and to those, if any, whom it is intended 
to benefit? 

PRESENT EVILS. 

TP HE tariff affects, directly or indirectly, all interests and all 
classes; therefore, all interests should be heard and con- 
sidered in the adjustment of the tariff schedules. Does the pres- 
ent method accomplish this? Is not the contrary fact conceded? 
Under the present plan the work is done by the Committee on 
Ways and Means of the House of Representatives, and by the 
Committee on Finance of the Senate, each sitting separately, each 
independently reaching tentative conclusions, and both reaching 
a final concurrence, which perforce implies mutual concessions 
and compromise. These committees have little or no disinterested 
expert assistance to guide them in their work. The evidence sub- 
mitted to them is wholly ex parte. Practically only one side of 
the case is ever effectively presented, viz., that of the parties in- 
terested in having a high rate of duty. Those who must pay 
the resulting tax, that is, the consumers, are rarely heard or rep- 
resented. The present plan provides no means whereby the 
interests of the vast body of consumers are intelligently studied, 
or whereby they are enabled, still less encouraged, to make any 
collective effort for the protection of their interests. 

The conditions under which this highly technical and vastly 
complex subject is now dealt with would be ludicrous, if they 
were not so utterly inadequate and unfair. The members of the 

13 



Congressional Committees are exceedingly busy men, each serving 
on other committees also, and devoting only a portion of his 
time to this work. Necessarily their public hearings must be 
limited to intermittent days, and be kept within limited hours, yet 
even ignoring these limitations, as pointed out by Senator Bev- 
eridge in the speech delivered by him in the Senate, February 5, 
1908, the time during which tariff bills have been considered, 
matured, and adopted during recent years has been strikingly 
inadequate, the facts being as follows : 

1890, McKinley Bill, House 5 mos., Senate 2 mos. 
1893, Wilson Bill, House 4 mos., Senate 3 mos. 
1897, Dingley Bill, House 4 mos., Senate iy 2 mos. 

In the same speech the Senator says: 

"At the public hearings the committee rooms overflow with 
representatives of various interests. The private hearings are 
equally congested. Both are rushed and confused. At these 
hearings there is no time, no opportunity, to go into any one 
subject thoroughly; no time, no opportunity, to test the state- 
ments there made; no time, no opportunity, to verify a single 
supposed fact. The most honest and alert man could not pos- 
sibly prevent, or even know about, incorrect statements; and the 
best of men might be excused from making a tariff rate which 
they did not intend to make, and which, had they known all the 
facts, they never would have made." 

He then quotes a signed article by Senator Vest in which the 
latter says: 

"I look back now upon what occurred during the Wilson- 
Gorman bill as a nightmare, from the effects of which I have 
never recovered. Before the conference ended three of the con- 
ferees had broken down under the constant strain to which we 
were subjected." 

When Congress proposed to consider a revision of the present 
tariff schedules in November, 1908, a card was issued by the 
Committee on Ways and Means inviting persons who desired to 
be heard to apply "to be assigned to a place on the program," 
and naming fourteen dates for the hearings, beginning November 
10th and ending December 4th. Each hearing was to cover a 

14 



"specific schedule," and was expected to last two days. The 
first two hearings covered the schedules relating to chemicals, 
liquors, tobacco, and sugar. One hearing, that of November 25th, 
was allotted for considering the question of duties on "metals 
and manufactures of"; that is, practically everything composed 
wholly or chiefly of metal ; from pig iron to pins, from steel rails 
to sewing machines, from jewelry to stoves, watches, and steam 
engines. Is it surprising that the thousands of manufacturers 
concerned were conspicuous by their absence from so farcical a 
proceeding ? 

Senator Beveridge, in his intelligent review of the facts, refers 
further to the great discrepancy in the conclusions reached by 
the Senate and House Committees, in their attempt to deal with 
technical questions involving applied science in almost every de- 
partment, and commerce in every branch. He says the differences 
between the duties fixed by the House and by the Senate, when 
framing the Dingley Bill, were "so wide apart that they are start- 
ling." The following are typical of the many examples he cites, 
viz. : 

Borax, per lb., House 2c, Senate 5c. 

Phosphorus, per lb., House 20c, Senate 10c 

Certain Knives, per doz., House 75c, Senate free. 

Certain Files, per doz., House 30c, Senate 50c 

Finished Lumber, per M. ft., House 50c, Senate 35c 
Sugar Cane, per cent, ad valorem, House 20c, Senate 10c 
Certain Cotton Cloth, per sq. yd., House 8c, Senate 6^c 
Floor Matting, per sq. yd., House 8c, Senate 4c 

The Conference Committee, which finally adjusted these dif- 
ferences of from 50% to 150%, was in session only five days. If 
these great discrepancies were due to the submission of divergent 
facts to the two committees, obviously the present system is at 
fault. If the two Committees reached such divergent conclusions 
from identical facts, is it surprising in view of the inherently 
technical character of the problems involved, and of the utter lack 
of qualifications, by previous experience on the part of the mem- 
bers of the Committees, to deal with such problems? 

In the latter connection it is significant that, of the House 
Committee which framed the Dingley Bill, one member was an 

15 



editor, one a wood manufacturer, and all the others lawyers. Is 
it surprising that a Committee so constituted, when called on to 
deal with a problem so technical, so complex, and so outside of 
the previous knowledge of its members, in such limited time and 
under such unfavorable conditions, should fail to reach sound 
conclusions? On the contrary, is it not self-evident that, by a 
method so inherently faulty, only a faulty result can be hoped for ; 
that the method has become outgrown, and that it should give 
place to one better suited to present conditions ? No one who has 
not studied the subject can realize the vastness and complexity 
of the problems involved in this work, the solution of which so 
vitally concerns and affects industry and commerce of every kind, 
and in every section of the country. 

EXAMPLES. 

A San example of the evils of the present method may be cited 
the case of the duty on pig lead. 

On the one hand we have the argument of a committee of 
manufacturers of lead products, set forth in a 24-page brief, 
issued in December, 1908, which shows that during the past eleven 
years the duty on lead has averaged 67% ad valorem, the duty on 
pig iron averaging less than 25%, and ingot copper being on 
the free list; which claims that the present duty is "prohibitive" 
and "unjust"; and which urges that it should be materially 
reduced. On the other hand we have Senator Borah, of Idaho, 
stating that in his belief a reduction would result "in the practical 
suspension of production of a very great number of mines, and 
tens of thousands of people out of employment," many other 
parties in interest supporting this view. 

Under present practice a decision between these clashing argu- 
ments and pleas must be made by Congress, guided by such argu- 
ment as may be submitted to its Committees, most, if not all, of 
these arguments being ex parte and representative of conflicting 
interests, with little knowledge on the part of those who must 
decide the question as to the many and intricate technical facts 
which underlie it, and with no means available for quiet and 
thorough study of these facts by competent and neutral investi- 
gators. Is it reasonable to hope that, under such circumstances, 

16 



the "Neutral Line" will be found which would imply the max- 
imum of benefits and minimum of injury to all concerned as pro- 
ducers and consumers of pig lead? 

In the textile trades alone the variety of products involved is 
counted by the thousands, and includes such scope and contrast 
as the following examples, viz., cotton cloth and cassimeres, ker- 
seys and knit goods, sail cloth and satin, stockings and sheets, silk 
and serges, ribbons and rags. Again, in the metal trades are 
included such range and contrast as the following suggest, viz., 
pig iron and printing presses, locomotives and locks, bridges and 
bells, chronometers and cables, steel billets and silverware. The 
latter group of products involve the employment of such diverse 
trades as the following, viz., molders and machinists, blacksmiths 
and boiler makers, watch makers and tool makers, finishers, fire- 
men, files v and fitters, etc., etc. 

The foregoing references are merely typical, a mere beginning 
of a full enumeration of products and processes as to two of the 
many important groups involved, each and all of which, in nearly 
each and all of their myriad products and processes, are affected 
directly or indirectly by tariff legislation. In order to follow 
intelligently simple statements of fact, by qualified experts in each 
of these varied fields of applied science and industrial activity, 
implies the need of knowledge in metallurgy, chemistry, electricity, 
agriculture, animal industries, textile industries, manufacturing, 
and milling, and, finally, of commerce in its many phases. Is it 
surprising that the present method has failed to cope success- 
fully with the problems thus presented ? Is it not evident that we 
need some better process by which to find the "Neutral Line" 
which shall imply the equal consideration of all interests con- 
cerned, above all those of the consumer, the common people? 

THE REMEDY. 

TH O correct these evils, to replace the present antiquated, inade- 
quate and outgrown method by one better fitted to present 
day conditions, the remedy heretofore proposed, and which this 
argument is intended to advocate, is the creation of a permanent 
technical governmental agency, designed and equipped to collect, 
collate and study statistical facts of every pertinent nature, and 

17 



to place the knowledge so acquired at the service of Congress, to 
aid and guide it in framing Tariff legislation so that it shall best 
conform to that "Neutral Line" which implies the greatest regard 
for the interests and rights of all the people. 

The project of a permanent Tariff Commission has now been 
long enough before the people to have become familiar and under- 
stood. The National Association of Manufacturers (with a mem- 
bership of 3,000 firms) on February 4, 1908, adopted the following 
resolution : 

"That, for the promotion of the best interests of American in- 
dustry, this conference advocates the immediate creation of a non- 
partisan permanent tariff commission, for the following purposes 
and ends, through Congressional action, viz. : 

First, The intelligent, thorough, and unprejudiced study of facts. 

Second, The development and enlargement of our foreign trade. 

Third, The accomplishment of this by reciprocal trade agree- 
ments, based on maximum and minimum schedules. 

Fourth, The adjustment of the tariff schedules so that they 
shall affect all interests favorably and equitably, without excessive 
or needless protection to any." 

The Merchants' Association of New York, in December, 1907, 
adopted a similar resolution, as follows : 

"Resolved, That the Board of Directors of The Merchants' As- 
sociation of New York heartily endorses the proposal to create a per- 
manent tariff commission, which shall take the tariff out of politics 
and politics out of the tariff; which shall include in its membership 
men qualified by training and experience to deal with the problems 
which would come before the Commission; which would command 
the confidence and respect of the country; and which would be com- 
petent to obtain and compile statistical information needed by Con- 
gress, and to formulate proposed legislation relating to the tariff, 
in a manner which would simplify and facilitate action thereon by 
the legislative department of the Government." 

This action was reaffirmed in December, 1908, at which time 

additional resolutions were adopted, including the following: 

"The creation of a permanent Tariff Commission, for the purpose 
of collecting, collating, and studying industrial and commercial facts, 
in this and other countries, pertinent to the tariff question, for the 
information and use of Congress in framing tariff legislation, and 
for the purpose of keeping Congress informed concerning changes 

18 



in industrial and commercial conditions which may justify or necessi- 
tate corresponding changes from time to time in the tariff." 

"Provision in the law for the negotiation of commercial agree- 
ments with foreign nations on the basis of a maximum and minimum 
tariff, and of the concession of minimum rates to the products of 
those foreign countries which reciprocate by giving corresponding 
concessions in the rates of duty on American products when im- 
ported by such foreign countries." 

Substantially similar resolutions have been adopted by a great 
number of civic, industrial, and commercial associations, chambers 
of commerce, boards of trade, etc., throughout the country. 
Against these, however, may be set the resolutions adopted by 
the American Protective Tariff League at its annual meeting in 
New York, reported by the press under date of January 30, 1909, 
which read as follows : 

1. "Resolved that the American Protective Tariff League is 
unalterably opposed to the creation of any such body. (A Tariff 
Commission.) 

2. Resolved that the Tariff League stands ready to give to 
those Committees and to Congress every support in its power by 
way of the most complete information as to the needs of American 
industrials and the needs of American labor. 

3. Resolved that the American Protective Tariff League, in 
annual meeting assembled, heartily approves of said policy of the 
Ways and Means Committee of the House of Representatives, and 
as endorsed by members of the United States Senate." 

But the press dispatches which published the foregoing resolu- 
tions contained also the following information concerning a call 
for help from the Ways and Means Committee, on the executive 
departments of the government, for a little of that technical and 
unbiased information which it so urgently needs, and which it 
would be the function of the proposed Commission, or Agency, 
to furnish; a "C. Q. D." message, as it were, from unskilled 
mariners adrift without compass on a sea of inexperience and 
perplexity. 

"Members of the House Committee on Ways and Means re- 
cently asked different executive departments to procure for them 
from foreign countries all the facts obtainable regarding the cost of 
labor and other expenses incident to the production of manufactured 
articles abroad for use in the preparation of the tariff bill. A large 

19 



mass of such data has been received and much of it has come in the 
various languages of the countries in which it originated. The 
bureaus supplying the information are generally limited in the 
number of their clerks, and most of them are especially short of 
translators. The committee itself has none. Whether the house 
will provide the needed translators, or dispense with the information, 
is problematical." 

Is not this direct evidence in favor of the creation of a per- 
manent Commission or Bureau for the purpose of collecting and 
collating information of the many kinds needed for this work, and 
capable of furnishing such information to Congress when and as 
needed ? 

A PRECEDENT 

IN contrast to the manner in which Congress thus attempts to 
deal with technical problems may be cited that Bureau of the 
Government known as the Patent Office, created to deal with 
technical problems in their relation to another phase of govern- 
mental control, namely, the granting of protection, for limited 
periods, on new contributions to the industrial arts. Originally 
each patent was a direct grant from Congress. The rapid devel- 
opment of industry and invention caused Congress, at an early 
day, to transfer this work to an administrative department, organ- 
ized for the purpose and competent to deal with the technical 
questions involved. The work of the Patent Office is now dis- 
tributed among 42 Divisions, in charge of a like number of 
principal Examiners, aided by 284 Assistant Examiners. Is there 
any sound reason why, in like manner, Congress should not now 
create a Tariff Office or Bureau, charged with the duty of col- 
lecting information, at home and abroad, pertinent or essential 
to a full comprehension of tariff problems, in form available for 
the use of Congress, and for the purpose of aiding the latter in 
the wise exercise of its power of legislating in regard to revenue 
and taxation, a power which under the Constitution it alone can 
exercise? Does not Congress need, and should it not welcome, 
assistance of this kind in performing this most important of its 
many and increasing duties? 

The whole tendency of modern science, whether in the work 
of research or in the application of science to the uses of man, 

20 



is to specialize, to recognize the vastness of the field and the im- 
possibility for the induvidual to understand thoroughly more than 
some fractional part thereof to which he devotes himself, and to 
concentrate the work of the individual within the lines which 
are thus implied. Has not the growth of our tariff system already 
reached a point where this necessity for specialization is apparent, 
and where it can best be met by the creation of a permanent 
Tariff Office or Agency? This question has been answered in 
the affirmative by other industrial nations, above all by Germany. 
The proposed solution involves no doubtful experiment or inno- 
vation. The experience of other nations is available to guide us, 
and points to what we may accomplish by reorganizing our meth- 
ods on similar lines and in conformity with modern conditions 
and usage. 

PENDING BILLS. 

TP HE President-Elect, Mr. Taft, in a letter to Chairman Payne 
of the Ways and Means Committee, has expressed himself 
on the subject of a Tariff Commission as follows: 

"A tariff commission would be harmful or useful as its functions 
were described in the bill. My own ideas have been that there ought 
to be a permanent commission of tariff experts to keep themselves 
advised by all the means possible of the cost of producing the 
article named in the schedule in foreign countries and in this country. 

I think that what we lack is evidence, and some such means 
might very well be used for the purpose of securing it. 

I should be the last to advocate a commission with any power 
to fix rates, if that were constitutional, as it would not be, or with 
any function other than that of furnishing the evidence to Congress 
upon which from time to time it might act." 

Two bills for the creation of a "Tariff Commission" are now 
pending in Congress. The Senate, or "Beveridge," Bill provides 
for a Commission charged with the collecting of statistical data 
here and abroad, and with the furnishing of information based 
thereon for the use of Congress in framing tariff legislation. The 
House, or "Fowler," Bill covers similar provisions, but goes 
farther by giving power to the Commission to fix duties, either 
generally or for individual countries, between such maximum and 
minimum limits as Congress may authorize. In both cases the 
intent appears to be to create a Commission which shall be an 

21 



adjunct to Congress, designed, among other purposes, to do for 
that body collectively what is now done in other directions for 
Senators and Representatives individually by their respective 
clerks, stenographers, and other assistants. It would seem expe- 
dient to give careful consideration to the alternate plan of vesting 
the functions proposed to be assigned to such Commission in a 
permanent Bureau of one of the administrative departments, pre- 
sumably the Department of Commerce and Labor, where its work 
could readily be organized and effectively be directed, reserv- 
ing to Congress or its Committees the power of indicating from 
time to time the work which it desires to have done. The latter 
plan would harmonize perfectly with the object set forth in the 
call for this Convention, namely, "The creation of a permanent, 
non-partisan, semi-judicial, tariff Commission, which shall collect, 
collate, and study industrial and commercial facts, in this and 
other countries, pertinent to the tariff question, for the informa- 
tion and use of Congress and the Executive." This is admirably 
paraphrased in the statement by President J. W. Van Cleave, of 
the National Association of Manufacturers, in these words : "We 
want a Commission to ascertain facts, on which Congress can 
base rates." 

WORK OF COMMISSION. 

"T HE functions assigned to a Commission or Agency created for 
these purposes might properly include the following, viz : 

1. The collection and analysis of statistical facts, in this and 

foreign countries, relating to articles embraced in the 
tariff schedules. 

2. The collection of similar data concerning the tariffs of 

other countries, especially those with whom we have 
important commercial relations. 

3. The collection of information concerning rates of wages, 

prices of materials, cost of living, etc., in this and 
foreign countries, especially as affecting the cost of 
articles covered by the tariff. 

4. Estimates, based on the information thus obtained, of 

the probable revenue yield of any proposed new duty. 

22 



5. Such other work of similar kinds as may be called for 

by Congress through its committees. 

6. The compiling and tabulating of all information so ob- 

tained, in the forms best adapted to serve the con- 
venience of Congress and to assist it in framing tariff 
legislation. 

7. The drafting of tentative tariff schedules, under the di- 

rection of Congress, to facilitate the work of the latter 
in framing tariff bills. 

8. Furnishing to the State Department information useful 

to the latter in considering, negotiating, or framing 
reciprocity and other commercial treaties. 

9. Furnishing information to other executive departments 

of the government which may be germane to their 
work or useful in connection therewith. 

Briefly, the motto of the Commission might be "To Furnish 
Facts, not Opinions. ,, 

An intelligent consideration of the work to be done by the 
proposed Commission should precede the question of its organiza- 
tion. With the general scope of its work clearly defined, the best 
mode of constructing the Commission will probably suggest itself. 
Its authority may be vested in a body of say five or more persons, 
or in a single head. In either case provision would be needed 
for a permanent staff of competent experts, experienced in all of 
the main divisions, at least, of industry, commerce, and applied 
science. If it is recognized that such a Commission has now 
become an indispensable need, and should be made a permanent 
part of our national administration, it would follow logically that 
due care should be exercised in framing the bill creating the 
Commission, and, while definitely fixing its character, scope, and 
powers, to provide reasonable flexibility as to details leaving these 
to be worked out in the light of practical experience. 

The study of this question may demonstrate that the best form 
of organization is that of a Bureau, such as the present Bureau 
of Statistics in the Department of Commerce and Labor, in 
which event an appropriate title would be "Bureau of Tariff 
Research," or "Tariff Statistical Office." 

23 



CONTINUOUS REVISION. 

"TARIFF revision should be continuous, not intermittent. The 
conditions which affect industry and commerce are ever 
in a state of flux ; they are rarely fixed, and never for long periods. 
Among the many arguments against the intermittent system, and 
in favor of the continuous system of revision are the following, 
viz. : 

Under the intermittent system a general, and usually a serious, 
disturbance exists and continues for many months preceding each 
recurring revision of the tariff. To-day business halts, awaiting 
the outcome of the present discussion, in Congress and the coun- 
try, concerning tariff revision. When revision is undertaken it 
involves the entire tariff structure, and opens the flood gates to 
opposing theories, clashing interests, and the pursuit of selfish 
ends by everyone concerned. The manner in which the work is 
done under such conditions has been alluded to above, and is 
antagonistic to the best results. The struggle endures for several 
months, when the curtain is rung down, the lists are closed and 
the new tariff is put into effect, to endure for weal or woe for 
many years. During the past nineteen years we have had three 
such upheavals, as follows: 

1890. McKinley Tariff. In effect about 4 years. 
1894. Wilson Tariff. In effect about 3 years. 

1897. Dingley Tariff. In effect 12 years. 

When the end of the period arrives, and often for many 
months preceding it, business is again disturbed by doubt and 
the fear of impending changes, and great injury thus done to 
commerce and industry. Industry halts when revision impends. 

Under the continuous system most of these adverse conditions 
would disappear or be reversed. In one sense the tariff would 
never be revised, in another it would be revised daily. Changes 
would be studied and suggested by the Commission, but could 
be made only by Congress. These might be massed in a single 
bill at each session, covering the changes which had developed 
as expedient during the preceding year, or, more probably, would 
be disturbed throughout each session of Congress among numer- 
ous minor bills, each relating to one or a few such changes. The 

24 



facts underlying and necessitating or justifying such changes 
would be ascertained, studied and reported to Congress by the 
proposed permanent Commission or Bureau. 

A new tariff bill, no matter how carefully framed, contains 
unavoidably various errors and inequalities, the correction of 
which should follow their discovery as soon as they have been 
properly studied and are clearly understood. Further changes 
should follow from time to time, as the conditions, either here or 
abroad, affecting this or that item in the schedules, change to 
an extent which either justifies or necessitates corresponding 
changes in the tariff. The final result of such successive changes 
in detail would be, for the tariff as a whole, substantial fixity and 
permanence, with freedom from all need or apprehension of 
sweeping revisions at uncertain intervals, but, as to individual 
items, facility for correction and change whenever and to what- 
ever extent changing commercial and industrial conditions might, 
in the judgment of Congress, guided by the information fur- 
nished by the Tariff Commission or Bureau, seem to be expe- 
dient or necessary. The whole tendency under such a plan would 
be steadily toward a closer, more scientific, and fairer adjust- 
ment of the schedules to the "Neutral Line," and, coincidentally, 
a steadily diminishing need or occasion for tariff changes except 
to meet new conditions. 

Is it not clear that the United States has outgrown its old 
method of studying and framing tariff legislation, and that a new 
and better method is needed? If this be granted, is it not equally 
clear that the logical and scientific method is to create a per- 
manent technical Tariff Commission or Bureau to undertake 
the work above set forth, and, under the direction of Congress, to 
assist the latter in ascertaining the "Neutral Line," to detect 
departures from it, and to frame legislation which will best con- 
serve all interests and tend to remove all inequalities and injus- 
tice? With such a Commission or Bureau, so organized, so 
directed, and so controlled, we would thus have a tribunal for 

(a) The Consumer, the people, to appeal to. 

(b) The Producer, who seeks relief. 

(c) The Congress, to obtain facts, advice, and assistance. 

25 



(d) The Administration, to obtain facts and information 
pertinent to commercial treaties. 

The Commission would thus become, as it were, a court of 
first instance, while Congress would remain a court of review 
and final jurisdiction. The latter would largely be relieved from 
detail, confusion, and the clash of selfish interests, and instead 
would have placed before it, for orderly review, consideration 
and constructive legislation, reliable facts, intelligently and im- 
partially presented and clear, well defined issues. 

Can we better solve our present problems, in this most vitally 
important part of our national government and finances, than by 
fairly trying the Commission or Bureau plan? If we find it good, 
we can then retain it; if we find it defective, we can seek to 
amend it; if finally we find it bad, we can abandon it. Whatever 
the outcome, is it not certain that the experience will prove help- 
ful and enlightening, and that the experiment, if not permanently 
satisfactory, will at least point the way to a better solution? 



TARIFF FRAMING. 

'T* HE tariff, being primarily a revenue measure, presumably 
consideration should first be given to determining the 
amount of revenue which it will produce. In some cases this 
question may admit of easy solution, but in many others the prob- 
lem is complex and its solution difficult. A duty may be so high 
as to curtail or even prohibit imports. In the latter case it ceases 
to be a source of revenue, and becomes a subsidy to the protected 
interest. Before a subsidy is enacted into law, a clear under- 
standing should be had as to its nature, as to the interests which 
would be benefited, and as to the interests which would suffer. 
The effort should be to find the "Neutral Line," and for this a 
complete and impartial knowledge of the technical facts involved 
is essential. 

In framing a protective tariff which includes both taxes and 
subsidies, the effort should be to find, as to each item, the "Neu- 
tral Line" intermediate between conflicting and opposing in- 
terests, 

26 



Between the interests of the producer and those of the con- 
sumer, 

Between the one who pays the tax and the one who benefits 
by it, 

Between the weight and importance of admitted benefit and 
profit, on the one hand, and of unavoidable injury and 
cost on the other. 

For all of the purposes thus implied the proposed permanent 
Commission or Bureau would become a most helpful instru- 
mentality and adjunct to Congress. 

THE INTEREST OF LABOR. 

IN all discussions of the tariff the plea is made that a chief 
purpose in view is "protection to American labor." Are we 
not liable to be misled by this plea? Does labor actually share, 
and, if so, to what extent, in the proceeds of the tax resulting 
from a protective duty ? Is it not a fact, known to all employers 
of labor, that, in fixing any individual rate of wages, no thought 
whatever is given to the tariff; that in every case the employer 
takes account solely of the value or efficiency of the workman, 
and of the current rate of wages in the trade to which he be- 
longs; that the workman is guided solely by his knowledge as 
to this current rate, and by his needs; and that each makes the 
best bargain he can? Is it not true, further, that the rate of 
wages, in every trade, depends in large part upon the cost of 
living, and that a high tariff, by enhancing the prices of the 
products which it affects, tends to increase this cost? Finally, 
is it not true that the real measure of a wage-rate is its purchasing 
power, and that needlessly high tariff rates tend to diminish the 
purchasing power of wages ? 

Granting the arguments thus implied, it follows that in fixing 
rates of duty at least equal effort and care should be devoted to 
investigating the incidence of the tax, and the burden it will 
impose on those on whom it will fall, as is devoted to consider- 
ing the benefits which it may yield to those whom it is intended 
to protect. Here, again, we should seek to find the "Neutral 
Line." Has not the present system failed to do this, and would 

27 



not the proposed Commission or Bureau of Tariff Research 
afford a partial, if not a complete, remedy by tracing and fore- 
casting the effect of proposed duties on American labor? 

OUR EXPORT TRADE. 

THHE United States is the great exemplar of free trade. No- 
where else, at any time in the world's history, have trade 
and commerce been so absolutely free and untrammeled as they 
are to-day in this great country, and among its eighty millions 
of people. But students of economics predict that before long 
we will need, if we do not to-day, a larger market in which to 
dispose of the rapidly increasing output of our soil, mines, farms, 
and factories ; that, great as is the consuming power of our own 
people, it will soon be exceeded by the producing capacity of our 
manifold industries ; and that, unless we soon take adequate 
measures to provide for the broadening of our foreign markets, 
there will develop an increasing pressure to sell in the home 
market, which, if not relieved, will tend to glut the latter, and 
which, by the increasing intensity of domestic competition, will 
operate inevitably to depress all prices in the domestic market. 
If this forecast of coming industrial and commercial events is 
sound, should we not promptly, in the adjustment of our tariff, 
seek to find that "Neutral Line" which, without serious or lasting 
injury to our domestic trade, will serve most effectively to open 
new and larger outlets for the export of our surplus products ? 

We are still chiefly producers of raw materials, and the greater 
part of our exports still consists of simple products which other 
industrial nations buy from us to convert into more highly fin- 
ished goods, a large part of which latter they resell to us v For 
example, about 74% of all cotton is grown in the United States, 
but of this only one-third is converted here into finished goods, 
the other two-thirds being sold abroad as raw cotton, there to 
be converted into the finished product and sold in the markets 
of the world, which we are seeking to enter, and much of it 
resold to us. Of the cotton textiles sold in 1907 in South Amer- 
ica, $47,000,000 were bought in England, and only $3,700,000 
in the United States. Should not our tariff policy aim to pro- 
mote the larger conversion of our raw materials into finished 

28 



products at home, thereby giving increased employment to Ameri- 
can labor? To accomplish this we need to find the "Neutral 
Line/' which, while promoting the growth of our manufactures, 
will yet safeguard the interests of our producers of raw ma- 
terials. For the study of the new and complex questions involved 
in this problem would not the proposed Commission or Bureau 
be invaluable to the nation and to its representatives in Congress ? 

In the case of India rubber we admit the crude article free, 
presumably for the reason that it cannot be produced in the 
United States, while a duty, ranging from 30% to 60%, is im- 
posed on the manufactures of rubber. Under this condition the 
rubber industry of the country has attained vast proportions, 
and many of its products are largely exported. May it not be 
possible advantageously to extend the policy thus implied into 
other lines of industry, and more largely than heretofore, by 
finding more accurately and scientifically that "Neutral Line" of 
tariff adjustment which, while fairly respecting and protecting 
those industries which yield the cruder products, those forming 
the raw materials of manufacturing, will so operate as to secure 
for our manufacturers opportunity to purchase their materials 
on favorable terms, and thus, by increasing their ability to com- 
pete in foreign markets, increase the field of employment for 
American labor, both in its lower and higher forms? 

In this connection it should be kept in mind that the finished 
product of one industry, especially of those which are closest to 
the natural article, becomes the raw material of the industry 
next higher in the scale of manufacture. Thus cotton passes 
successively from the field to the bale, into yarn, into cotton 
cloth, and finally into print goods and still higher products, each 
of these stages constituting a distinct industry, and all forming 
a progressive chain. Except so far as profits and royalties are 
added to cost at each of these progressive stages, the entire cost 
of almost every finished article consists of labor, applied suc- 
cessively and cumulatively throughout the progressive series of 
operations. Whatever tends, by lowering the purchasing power 
of money, to enhance the wages rate, operates directly and pro- 
portionately to enhance the final cost of the product, without 
compensating benefit to the wage-earner, and to the disadvantage 

29 



of the manufacturer who seeks to find an outlet for his surplus 
product in export markets. As explained elsewhere, wages rates 
are not fixed with direct reference to the tariff, but chiefly are 
determined by the cost of living, and by the purchasing power of 
the money in which the wages are paid. 

THE FORM. 

AS shown by the above, the form of agency which thus far 
has been considered almost exclusively is that of a "Com- 
mission. " Two forms of commission have been suggested: (1) 
A mixed commission, composed of members of Congress and 
men selected as leading authorities or experts in various fields 
of applied science; and (2) a governmental commission com- 
posed wholly of persons in the permanent and exclusive employ 
of the Government. Either plan contemplates also a staff of 
experts, clerks, stenographers, and other assistants. 

Of these alternatives the second seems to possess greater 
advantages, and to offer better grounds for believing that it 
will accomplish its purpose successfully. Continuity of method, 
of work, of development, and of experience, and singleness of 
purpose, are as essential to the best result in this case as in most 
other undertakings. A member of Congress could devote at 
best but a fraction of his time to this work, and, therefore, would 
not be in continuous relation with his associates. Should his 
term of office end, his services and his accumulated experience 
in this work would be lost, and his place would be taken by a 
new man, who would have to acquire over again all of the 
knowledge and experience which his predecessor had gained. 
On these grounds and many others it would seem better that the 
proposed organization should be composed wholly of permanent 
officers and employees, and that the time and services of mem- 
bers of Congress who may have to deal with this subject should 
be devoted exclusively to the work of reviewing the information 
furnished and the conclusions reached by the permanent tariff 
agency, and to the constructive work of framing legislation based 
thereon. 

If the latter view be accepted, the question then arises, would 
it not be better to abandon the idea of a "Commission," and to 

30 



substitute therefor the Bureau form of organization? If so, the 
experience of the Administrative Departments, in the organiza- 
tion and management of the numerous Bureaus existing within 
them, should form a valuable guide. Presumably such an or- 
ganization would imply a single responsible head, with a staff 
of assistants proportionate to the amount of work assigned. 
Among these should be men whose previous education and ex- 
perience qualify them as experts in at least the leading lines of 
technical knowledge and applied science which enter into the 
tariff problem. As in the Patent Office, each such expert should 
have assigned to him a well defined field of work, in which he 
and his assistants, as experience accumulates, may each acquire 
increased knowledge and experience in his special field, and thus 
become increasingly useful for the purposes for which the Bureau 
would exist. 

This process of "functional management" is typical of modern 
tendencies in almost every field of work. It is the direct and 
natural outcome of the specialization of modern science and 
modern industry, and its tendency reacts further to increase that 
specialization. The benefits of functional management are now 
beyond discussion, and should be sought in this important divi- 
sion of the work of government. The mere proposal to create 
a "Tariff Commission" implies a recognition of the highly spe- 
cialized nature of the work, and the need of providing functional 
assistance for the legislative department of the government in 
dealing with tariff problems. 



CONCLUSION. 

T HE essential features in the foregoing argument may be sum- 
marized as follows, viz: 

1. The tariff embodies the heaviest tax which the people of 
the United States impose on themselves ; it yields one-half of the 
national revenue. 

2. The present method of fixing tariff rates is through Con- 
gressional Committees, acting chiefly on ex parte evidence, un- 
aided by neutral expert advice, and acting at long intervals. 

31 



3. This method produces inequalities which are unnecessary, 
unjust, and either harmful or absurd; it is crude, unscientific, 
and outgrown ; it should be replaced by a better and more modern 
method. 

4. The present method imposes an unnecessary and unrea- 
sonable hardship on Congress, by requiring its Committees to do, 
under extreme pressure and a most unfavorable environment, 
preparatory work for which their members possess no previous 
training or experience, for which they have no adequate oppor- 
tunity, which is highly technical and specialized, and which 
should be done for them by a properly constituted subordinate 
agency. 

5. The remedy is a permanent technical Bureau of Tariff 
Research, to collect, collate, analyze, and report industrial and 
commercial data, domestic and foreign, for the use and guidance 
of Congress and the Executive Departments. 

6. Tariff revision should be continuous not intermittent, 
thereby steadily approximating the tariff more closely to the 
"Neutral Line" of the greatest good and the least injury to all 
interests ; adjusting it promptly to current changes in industrial 
and commercial conditions at home and abroad; obviating the 
chronic upheavals of business which intermittent revisions in- 
volve; and giving to the people continuity and steadiness, com- 
bined with reasonable flexibility, in this vitally important factor 
in their national and private affairs. 

7. The influence of the tariff on wages rates is indirect, not 
direct; it chiefly influences them by affecting the cost of com- 
modities and living, which in turn chiefly determine the rate of 
wages ; the true measure of a wage-rate is its purchasing power ; 
hence anything tending to enhance the general cost of living 
operates to depress the purchasing power of wages ; therefore, 
the tariff should be adjusted with regard for all its effects on all 
the people, not with regard for protected interests only. 

8. Our domestic production is rapidly overtaking our domes- 
tic consumption ; hence our tariff policy should aim to find that 
"Neutral Line" which, while conserving the home market, will 

32 



also best promote our progress in ability to compete on equal 
terms with the other great industrial nations in the markets of 
the world. 

9. We are now exporters chiefly of raw products which other 
nations, our competitors, convert into finished goods and re-sell 
in higher forms in the markets of the world, largely to us; our 
tariff policy should aim to encourage a larger conversion of our 
raw materials into finished goods at home and by American labor, 
to promote which end Congress should have the assistance of 
a permanent Bureau of Tariff Research, or its equivalent. 

10. Finally, Congress should now address itself to the crea- 
tion of a permanent governmental office or Bureau, organized 
and maintained for the continuous and scientific study of the 
problems thus indicated, which shall perform, as Congress may 
direct, all of the technical work involved, through a competent 
staff of experts, statisticians, translators, stenographers, and clerks ; 
which shall furnish to the Committees of Congress such infor- 
mation and assistance as they may call for ; and which shall thus 
effectively aid Congress in finding the best solution of our tariff 
problems, in maintaining the tariff at all times in close adjustment 
to current conditions, and in overcoming the evils of our present 
system of intermittent revision, with the recurring upheavals 
which it involves in the business affairs of the Nation and the 
People. 



ADDENDUM 



TPHE doubt expressed on Page 22 of the preceding paper, as 
to the choice between a "Commission" or a "Bureau," 
disappeared completely during the discussions which took place 
at the Indianapolis Convention, February 16-17-18, 1909. The 
arguments there advanced showed conclusively that, while the 
"Bureau" form may be the best for the routine work of collect- 
ing, collating and digesting statistical facts, and perhaps the 
most expedient form to adopt for the present, the higher and 

33 



still more important work which will ultimately be needed could 
better be done by a permanent "Commission," especially the semi- 
judicial work of adjudicating between conflicting claims, deter- 
mining on recommendations as to tariff legislation, and advising 
upon the framing of trade agreements with other nations. Having 
in view all of the possibilities thus implied, it seems clear that the 
best ultimate form of organization would be a Commission, con- 
sisting of seven or nine members, corresponding in character, dig- 
nity and rate of compensation to the present Interstate Commerce 
Commission, with an effective Bureau, organized under its con- 
trol, for the accomplishment of the vast amount of detail work 
to be done. 



34 



WORK OF THE INDIANAPOLIS 
CONVENTION 

THE result of the addresses delivered and the discussions 
which took place during the Convention was the adoption, 
by a practically unanimous vote, of the following resolutions, 
viz. : 

RESOLUTION. 

"We demand from Congress, for the equal benefit of all 
classes of the people, and in the name of all American industry, 
of farm, factory, labor and commerce, represented in the National 
Tariff Commission Convention, held at Indianapolis, Ind., on 
February 16, 17 and 18, 1909, consisting of delegates from forty- 
two States and representing 223 Agricultural, Civic, Commercial 
and Industrial bodies, the immediate creation of a permanent 
Tariff Commission, for the following purposes and ends, through 
Congressional action, viz.: 

"First: The collecting, and the intelligent, thorough and un- 
prejudiced study of Tariff facts. 

"Second: The preservation and promotion of our domestic 
and the development and enlargement of our foreign trade. 

"Third: The accomplishment of this by reciprocal trade 
agreements, based on maximum and minimum schedules. 

"Fourth: The adjustment of the tariff schedules so that 
they shall affect all interests equitably. 

"Fifth: The fixing of the rates of duty to be paid on the im- 
ports from any foreign country, within the limits of the maxi- 
mum and minimum rates established by Congress, under recipro- 
cal trade agreements negotiated by or under the direction of the 
President, in order thereby to develop and protect our foreign 
trade by the means favored by President McKinley and author- 
ized by Sections 3 and 4 of the Dingley Law. 

"We urge that, prior to the passing of a Bill creating such 
a Commission, Congress, during its special session about to be 

35 



called, shall prepare and adopt, with the assistance of the best 
information presently available, a revised tariff, as completely 
and accurately adjusted to present conditions, and therefore as 
stable, as is possible at this time." 



REASONS AND EXPLANATIONS. 

"We make this demand because: 

"First: The Tariff yields one-half our total revenue — $333,- 
000,000 in the fiscal year 1906-7 — and concerns all classes and all 
the people. While it favorably affects the rate of wages, it 
also influences the cost of living, and, therefore, the purchasing 
power of wages. It directly affects the cost of production, and, 
therefore, our ability to compete in foreign markets. The prob- 
lem is vast and complex, and vitally affects all industry and com- 
merce. 

"Second: It imposes on Congress technical work which it 
should not be required to perform. It results in unnecessary, 
unreasonable and unfair discrepancies and errors. It perpetuates 
such errors for long periods, involves intermittent revision, and 
tends to violent changes of policy. 

"Third: The Commission plan will substitute a scientific 
method which will establish the neutral line of maximum bene- 
fits and minimum evils to all interests. It will accomplish this 
by a governmental agency, properly equipped to furnish Con- 
gress with the vast amount of cumulative technical data required 
to assist it, both in framing legislation based thereon, and in fore- 
casting the results of such proposed legislation ; enable Congress 
to concentrate its time and efforts on constructive legislation 
based on such facts, and assist our Executive departments to in- 
telligently negotiate commercial agreements for the increase and 
extension of our foreign trade. It will promote the prosperity 
of the country and the larger employment of American labor, 
by encouraging the conversion of our raw materials into fin- 
ished products before their export to foreign markets. It will 
provide for the prompt correction of errors in the Tariff and a 
recognition of changing conditions." 

36 



Resolved: That this Convention heartily endorses the posi- 
tion of the President-elect, the Honorable William H. Taft, in 
his open letter to Honorable S. E. Payne, Chairman of the Com- 
mittee on Ways and Means, which is as follows : 

44 A Tariff Commission would be harmful or useful as 
its functions were described in the Bill. My own ideas have 
been that there ought to be a permanent Commission of 
Tariff experts to keep themselves advised by all the means 

possible of the cost of producing the article named in the 
schedule in foreign countries and in this country. 

"I think that what we lack is evidence, and some such 
means might very well be used for the purpose of securing it. 

"I should be the last to advocate a Commission with 
any power to fix rates, if that were constitutional as it would 
not be, or with any function other than that of furnishing 
the evidence to Congress upon which from time to time it 
might act/' 

The Convention also adopted a resolution for the creation of 
a permanent organization in the form of a "General Committee," 
consisting of one hundred members, to be appointed by the 
President, at least two members to be appointed from each State 
of the Union, and an Executive Committee of ten members, also 
to be appointed by the President, of which he shall ex officio be 
a member. 

The permanent officers selected were as follows: 

President, J. W. Van Cleave, St. Louis, Mo. 

Chairman Executive Committee, H. E. Miles, Racine, Wis. 

Treasurer, John Kirby, Jr., Dayton Ohio. 



37 




021 048 248 9 



